Annual consumer price index (CPI) inflation growth was unchanged between April and May, remaining at 2.8%, the Office for National Statistics (ONS) has revealed.

Month-on-month, CPI inflation grew by 0.2% in May, the same rate recorded 12 months prior.

The ONS stated that transport made the largest upward contribution to the monthly change in CPI annual rates. In contrast, food and non-alcoholic beverages made the largest, partially offsetting, downward contribution.

The latest figures come ahead of the Bank of England’s base rate decision, which will be announced tomorrow.

Sales and marketing director at Phoebus Software, Richard Pike, stated: "Inflation holding at 2.8% is an encouraging surprise, suggesting price pressures are easing more quickly than economists had expected and strengthening the case for the MPC to hold rates tomorrow.

"The announcement this week of a US–Iran peace agreement has helped push oil prices lower, which should reduce upward pressure on energy costs in the months ahead. However, some near-term inflation momentum is likely to persist.

"For borrowers and lenders, the outlook remains uncertain rather than directional. Inflation is still above the Bank of England’s target, and policymakers will want clearer evidence that pressures are sustainably easing before adjusting policy. As a result, mortgage rates are likely to stay elevated for now, even as expectations of rate cuts later this year begin to build."

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